Wednesday, September 06, 2006

Mykola [Vatman] Azarov

First deputy Prime minister and Finance Minister Mykola Azarov has been looking after his pals again. 'Ukraina Moloda', quoting a document provided by the usual 'reliable source', claim that exporting manufacturers from Donetsk [and Lugansk] have received a far greater share of Value Added Tax reimbursements for the month of August, than similar exporting manufacturers from other regions of Ukraine.

Three weeks ago MinFin decided to suspend VAT repayments entirely, but then Azarov corrected this decision, explaining that the gov't merely wanted to check the register of enterprises claiming VAT refunds, revealed that half of them were probably fictitious. He added that repayments would only be made to those enterprises that were 'worthy' of them.

For August, instead of 313 million hryvens worth of refunds, [about $60m] Donetsk businesses received 696 million hryven; and of this sum, 153 million was paid out on the last banking day of the month.

In contrast, other regions received far less than that to which they were entitled. E.g. Kyiv received only 60 million out of a planned 376 million.

'U.M' say this may indicate that the new gov. is not confident of finances in the months to come, and are making sure that their guys get their money back first, while there is still some money in the pot, before it's too late.

"The second concern is that Azarov is back as minister of Finance. He was fiscally conservative. That was not the problem. But a major problem under Azarov’s previous rule as minister of Finance was that exports didn’t get their value-added tax refunds. If you wanted to get your value-added tax refund – it should be 20 percent of the total amount – you had to pay 20 percent or so in commission to relevant officials in order to get 80 percent of what you were entitled to. This was a well-organized, corrupt racket. I can’t point the finger to exactly who was responsible, but this was the rule under the last Yanukovych government. And I think that this we should speak very loud and clear about in order to do whatever we can so that it’s not re-established, because it doesn’t work like that now."Anders Aslund - 9th August 2006